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Arbitration over ZCI stake due mid-2007 Posted: Tue, 02 Jan 2007 [miningmx.com] -- ZCI, the Bermuda-registered business that has a 28.4% stake in Zambia’s Konkola Copper Mines (KCM), said arbitration to resolve a long-standing dispute with India’s Vedanta Resources would be heard in mid-2007. Commenting in ZCI’s interim results to end-September, chairman Thomas Kamwendo, said he was unable to disclose details of the dispute with Vedanta which controls the balance of KCM. Vedanta has an option to buy ZCI’s remaining shares in KCM but a dispute between the parties was declared in October. The dispute relates to interpretation of Vedanta’s call option deed over the ZCI shares. As a result, an independent valuation of the 28.4% stake in KCM cannot be completed. Negotiations between ZCI and Vedanta had been “extremely time consuming,” Kamwendo said. “Preparations for the arbitration proceedings are continuing and the parties have agreed on the appointment of the arbitrator. It is expected that the arbitration will be heard in mid-2007,” Kamwendo said in ZCI’s interim results commentary. The timing of the sale of ZCI’s stake in ZCM is all important owing to changes in the copper price and how this may affect the valuation. The copper price has been under pressure lately following news that London inventories have now increased to about 2.5 years from almost exhaustion 18 months ago. Copper is currently trading at $6,280/ton on a cash basis from about $8,000/ton in May 2006. However, the improvement in the copper price helped ZCI to its first dividend from KCM in “many years” said Kamwendo. Some $1.6m was received by the company at the end of November. “The amount of $1.6m received by the company may be lower than the board and shareholders would have hoped, but it is an extremely encouraging sign of the effects of current copper price levels on the profitability of KCM and by extension, ZCI,” said Kamwendo.Free news alerts: click here to subscribe
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